TIDMPPIR TIDMPPIX
RNS Number : 4386Y
ProPhotonix Limited
01 March 2012
1 March 2012
ProPhotonix Limited
("ProPhotonix" or "the Company")
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2011
ProPhotonix Limited (London Stock Exchange - AIM: PPIX and PPIR,
OTC: STKR.PK), a designer and manufacturer of LED light engines and
laser diodes modules with operations in Ireland and the U.K., today
announces its unaudited preliminary results for the year ended 31
December 2011.
Financial Highlights
-- Revenue increased 12% to $17.0 million (FY 2010: $15.2 million)
-- LED revenue increased 27% to $8.6 million (FY 2010: $6.8 million)
-- Gross profit increased 9.2% to $6.3 million (FY 2010: $5.8 million)
-- Gross profit margin stable at 37.4% (FY 2010: 38.2%)
-- Operating loss reduced to $843,000 (FY 2010: loss $2.8 million)
-- EBITDA break-even vs. $0.3 million loss in 2010 (excluding
AIM flotation expenses and facility lease termination charges)
-- Order bookings of $16.6 million (FY 2010: $15.1 million)
-- Percentage revenue by market sectors: industrial 73%, medical
18%, and homeland security & defense 9%
-- Percentage revenue by geography: 57% Europe, 33% North America and 10% Rest of World
-- Cash balances of $4.1 million (FY 2010: $1.8 million)
Operational Highlights
-- Implemented threefold increase in LED production capacity early in 2011
-- Successful placing to raise $5.1 million (GBP3.3 million) completed in July 2011
-- Completed realignment of sales organization along geographic
lines and significantly increased size of sales force in Q4
2011
-- Appointment of Luster LightTech as exclusive distributor in China
-- Appointments of Tim Steel and Vincent Thompson as non-executive directors
Mark W. Blodgett, Chairman and Chief Executive Officer,
commented: "2011 was an important year for ProPhotonix during which
we significantly strengthened our R&D and sales efforts,
expanded our product offering, and strengthened our balance sheet
with the secondary stock offering last July. While disappointed
with the slowdown in sales to several customers in the solar
equipment industry in the second half, the Company reported
improved financial results and experienced sales growth in
2011."
Enquiries:
ProPhotonix Limited Tel: +44 (0)12 7971 7170
Mark W. Blodgett, CEO ir@prophotonix.com
N+1 Brewin Tel: +44 (0)113 241 0130
Andrew Craig/ Ben Wright
Cubitt Consulting Tel: +44 (0) 20 7367 5100
Chris Lane
RD:IR Tel: +44 (0) 20 7492 0500
Isabel Richardson
About ProPhotonix
ProPhotonix Limited, headquartered in Salem, New Hampshire, is
an independent designer and manufacturer of diode-based laser
modules and LED systems for industry leading OEMs and medical
equipment companies. In addition, the Company distributes premium
diodes for Opnext, QSI, Sanyo, and Sony. The Company serves a wide
range of markets including the machine vision, industrial
inspection, defense, sensors, and medical markets. ProPhotonix has
offices and subsidiaries in the U.S., Ireland, U.K., and Europe.
For more information about ProPhotonix and its innovative products,
visit the Company's web site at www.prophotonix.com.
Full Year 2011 Financial Results
Revenue for the year ended 31 December 2011 was $17.0 million,
an increase of 12% compared with $15.2 million in 2010. Gross
profit was $6.3 million, an increase of 9% compared to $5.8 million
in 2010. Gross profit margin decreased slightly to 37.4% from 38.2%
in 2010 due to a shift in product mix and an increase in production
costs. Foreign currency exchange positively impacted gross profit
margin by $0.2 million.
Operating expenses, excluding intangible amortization and asset
impairment charges, totaled $6.9 million versus $7.1 million in
2010, net of approximately $0.9 million of charges related to the
London Stock Exchange AIM flotation and a facility lease
termination charge. Consistent with our objectives, sales and
marketing and research and development (R&D) expenses increased
15% in 2011 over 2010, while general and administrative expenses
declined 29% over the same period. The operating loss was $0.8
million, as compared to a $1.7 million loss in 2010, excluding the
AIM flotation expenses and facility lease termination charges of
approximately $0.9 million and an impairment charge of $0.2
million. EBITDA was break-even versus a 2010 Adjusted EBITDA loss
of $0.3 million, which excludes the AIM flotation expenses and
facility lease termination charges. Net loss was $1.4 million
compared to the 2010 net loss of $2.6 million. This includes a gain
on sale of discontinued operations to the amount of $0.5 million
and a loss from discontinued operations to the amount of $0.1
million, as well as the AIM flotation expenses and facility lease
termination charges of $0.9 million.
Strategy and Markets
ProPhotonix consists of two business units: an LED systems
manufacturing business based in Ireland (Cork), and a laser modules
production and laser diode distribution division located in the
United Kingdom (Hatfield Broad Oak). Corporate, marketing and the
North American sales activities are based in Salem, New Hampshire,
United States of America. With comparatively faster growth in the
LED market in 2011 LED system revenue exceeded laser revenue for
the first time.
Following the flotation on AIM in December 2010 and the
successful placing to raise $5.1m in July 2011, the Company is
positioned to make significant progress on in its strategy to
combine its expertise in two key areas of optics: LEDs and lasers.
The Company intends to capitalise on increasing opportunities in
this area by designing and manufacturing high value, high margin
components for global manufacturers of equipment.
In February 2011 the Company reorganized its sales force.
Historically, the Company had sales personnel dedicated to either
the LED or laser product lines. Commencing last spring the Company
realigned sales personnel along geographic lines to more
efficiently cover its global markets. With the completion of the
secondary offering in July 2011, and the stated purpose of
investing in sales, marketing and R&D, the Company first
embarked on expanding the North America sales force to capitalize
on the potential in the region. The North America sales force
expansion was completed in the fourth quarter of 2011. Meanwhile,
the Company focused on increasing Asian sales and in June 2011
added Luster LightTech ("Luster") as its exclusive distributer in
China. Luster has a large sales force, and in conjunction with our
engineers and technical salespeople, we expect that Luster will
create a number of sales opportunities which were not previously
available to ProPhotonix. In addition, the Company expects to add
distributors in Taiwan and Korea in the near future. The Company
understands that growing its Asian sales will be a longer term
project. In Europe, where we focus on direct sales and supporting
select distributors in specific countries, we recently added
another salesperson covering Germany and expect to complete the
build out of our European sales force during the first quarter of
2012.
Since late 2010, the Company has made significant investments in
R&D, including expanding its R&D team in Cork, which now
includes a full complement of optical, mechanical and electrical
engineers and represents over 20% of the Company's total workforce
of 100 employees. They are focused on continuing to develop
proprietary products to meet clearly defined demand from our
customers and the markets which we serve. During 2011 the Company
developed and launched several new laser module and LED products
for the industrial, mostly machine vision market, and medical
markets as detailed below:
New Product Introduction - 2011
-- InViso Micro: an extension to the existing InViso range that
delivers line thicknesses as low as 16 um at 120 mm working
distance, while preserving InViso's innovative form factor
-- COBRA Max: designed in the same slim modular form factor as
the COBRA Slim with twice the illumination intensity
-- COBRA Flex: an extreme brightness line light in a more
compact form factor making it perfect for applications where space
is restricted
-- COBRA Slim FL: twice the illumination intensity as COBRA Slim
designed specifically for short working distances
-- LOTUS Line Light: undertaken further development to include
UV products and is now available in 365nm or 395nm
-- HL40023MG: a high power 404nm, 500mW violet laser diode from
Opnext
-- HL45023TG from Opnext: the first in a planned family of blue
laser diodes, provides 60mW of optical output power at a 445nm
while consuming 30 percent less power than existing commercially
available blue lasers
LEDs are more energy efficient and longer-lasting than
conventional alternatives such as halogen and incandescent
lighting. With recent advances in LED technology, the Company is
able to design and manufacture High Brightness (HB) LED arrays and
light engines for the machine vision, medical and homeland security
markets. This opens up a wide variety of long-term growth
opportunities for the Company.
ProPhotonix's systems are largely based on chip-on-board (COB)
technology, allowing the Company to create more densely packed LED
light engines and arrays, which offers much brighter and more
compact light devices compared to conventional LED packaging
technologies. In early 2011 the Company brought on-line a threefold
increase in COB LED production capacity providing ample production
capacity for future growth. In addition, in 2011 the Company
broadened its InViso platform of laser modules for the machine
vision market and added Korean based QSI industrial laser diodes to
its line of distributed diodes, which includes Opnext, Sanyo and
Sony.
ProPhotonix sells its products principally into three markets:
industrial, (primarily machine vision illumination, which
represented 73% of total 2011 sales), medical (18%) and homeland
security & defense (9%). The Company foresees growth
opportunities in all three markets it serves which are briefly
described below:
Industrial (Machine Vision)
Within the industrial market, machine vision is the term used to
describe computerized analysis for controlling manufacturing
processes, for example automated inspection. In terms of quality
and speed, lighting is often a critical component in machine vision
and the Company manufactures both LED systems and lasers designed
specifically for this market. IMS Research in February 2010
estimated the market to be worth $119 million in 2011 and forecasts
it to reach $154 million in 2013. The Company offers a selection of
standard products, including modular COBRA line lights for the line
scan market (glass, thin film, foil & textile production) and
the InViso range for 3D machine vision inspection. More recently,
the Company has been working on several potential high volume OEM
(custom) applications for the semiconductor and automotive
markets.
Medical
The medical market represents a larger potential market than the
machine vision market. ElectroniCast Consultants estimated in
November 2010 that medical products by 2016 will utilize 5.28
million LED chips representing approximately $186 million of sales
at the LED chip level and a correspondingly higher turnover at the
end product level. The Company has experienced some early successes
in the medical (including dental) market. In addition, laser
modules are used in the bio-medical field for flow cytometry and
other applications, as well as patient positioning in the imaging
market and dental scanning. The Company has already gained a
foothold in the market, supplying a variety of applications, with
current customers including the world leader in stationary imaging
equipment, a portable x-ray equipment manufacturer, a dental
imaging manufacturer and also a pioneer in the manufacturing of
devices offering eye tracking capability utilizing ProPhotonix's
custom infrared LED array. The Company intends to broaden its
product marketing effort in the medical field since it offers
significant long-term revenue growth opportunities.
Homeland Security & Defense
LED systems, laser modules and laser diodes are used in a wide
variety of applications in the security and defense fields.
Although the market, as a whole, is difficult to quantify, large
markets include lasers and laser diodes for targeting and gun
sights, and infrared LED illuminators for reading license plates
(OCR - optical character recognition). The Company currently
supplies five gun sight manufacturers in the US and Europe, as well
as two of the leading manufacturers of Auto Number Plate
Recognition (ANPR) systems. In 2011, Technavio research estimated
that the global ANPR market will grow 30% CAGR to $579 million in
2014. While the illumination portion is only one part of these
systems, OEM LED illuminator sales represent a significant growth
opportunity for ProPhotonix over the next two years and the Company
is currently targeting other OCR companies.
Outlook
Despite the well documented weakness in the solar equipment
market in late 2011 which negatively impacted financial results,
the Company made significant progress last year growing revenues,
improving overall profitability, strengthening the balance sheet
and broadening the Company's LED and laser product line.
With the strengthened sales force, including new distribution
partners in Asia, the Company has a number of significant revenue
opportunities in process in the industrial market, specifically in
the semiconductor and automotive industries, as well as in the
medical and homeland security markets. In addition, the R&D
team was nearly doubled in 2011 to capitalize on several
substantial opportunities and further customer-led product-line
development. We are optimistic that these initiatives will have a
positive impact on revenues and profitability in the second half of
2012 and into 2013.
Board
In March 2011, both Tim Steel and Vincent Thompson joined the
Board as Non-Executive Directors of the Company. Tim Steel was
previously Vice Chairman of Cazenove Capital Management Limited
until the end of 2009 when he stepped down to pursue a portfolio
career and work more closely with smaller developing businesses.
Vincent Thompson has over 30 years' experience in corporate finance
and spent the majority of his career with Morgan Grenfell & Co.
Limited and Hambros Bank Limited (later Societe Generale, following
the takeover of Hambros Bank Limited) and was a Director at both.
Both Tim and Vincent have made a significant contribution to the
Company since their appointments.
Financial Reporting
At the time of the Company's admission to trading on AIM in
December 2010, the Board elected to continue to report on a
quarterly basis, as historically it had done in the United States.
The Board, given the added expense and management time involved
with quarterly reporting, has decided to move to a semi-annual
reporting schedule which is in line with the reporting procedures
of a vast majority of companies quoted on the AIM market of the
London Stock Exchange. The Company will ensure that its
shareholders are kept up to date with trading throughout the year
and will release 'pre-close statements' in respect of each of its
six month accounting periods on an on-going basis.
Consolidated Statements of Operations
($ in thousands except share and per share data)
(unaudited)
Years Ended
December 31,
2011 2010
----------------- -----------------
Net Revenue $ 16,977 $ 15,194
Cost of Revenue 10,631 9,384
----------------- -----------------
Gross Profit 6,346 5,810
----------------- -----------------
Research & Development Expenses 928 750
Selling, General & Administrative Expenses 5,986 7,215
Amortization of Intangible Assets 275 390
----------------- -----------------
Operating Loss (843) (2,771)
----------------- -----------------
Other Income / (Expense), net (184) 688
Amortization of Debt Discount and Financing Costs - (551)
Interest Expense (363) (552)
----------------- -----------------
Loss Before Taxes from Continuing Operations (1,390) (3,186)
Tax Provision (Benefit) 37 (111)
----------------- -----------------
Net Loss from Continuing Operations (1,427) (3,075)
Gain on Sale of Discontinued Operations, net of tax - 542
Loss from Discontinued Operations (19) (116)
----------------- -----------------
Net Loss $ ( 1,446) $ ( 2,649)
================= =================
Loss Per Share:
Basic and diluted net loss per share from continuing operations ($0.02) ($0.07)
Basic and diluted net gain per share from gain on sale of discontinued
operations $0.00 $0.01
Basic and diluted net loss per share from discontinued operations ($0.00) ($0.00)
Basic and diluted net loss per share ($0.02) ($0.06)
Basic and diluted weighted average shares outstanding 63,485,600 44,950,980
-------------------------------------------------------------------------------- ----------------- -----------------
FINANCIAL STATEMENTS
PROPHOTONIX LIMITED
CONSOLIDATED BALANCE SHEETS
(unaudited)
($ in thousands except share and per share data)
December 31 2011 2010
Assets
Current assets:
Cash and cash equivalents $ 4,066 $ 1,811
Accounts receivable, less allowances of $13 in 2011 and
$47 in 2010 2,405 1,957
Inventories 1,694 1,892
Prepaid expenses and other current assets 288 295
Total current assets 8,453 5,955
Net property, plant and equipment 653 906
Goodwill 458 468
Acquired intangible assets, net 332 610
Other long-term assets 36 66
Total assets $ 9,932 $ 8,005
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Revolving credit facility $ 643 $ 641
Current portion of long-term debt 1,587 600
Capital lease obligations - 24
Accounts payable 1,456 2,003
Income taxes payable 29 -
Accrued expenses 780 1,368
Total current liabilities 4,495 4,636
Long-term debt, net of current portion 1,631 3,407
Other long-term liabilities 178 150
Total liabilities 6,304 8,193
Stockholders' equity (deficit):
Common stock, par value $0.001; shares authorized
150,000,000 at December 31, 2011 and 100,000,000
at December 31, 2010; 76,059,456 shares issued and
outstanding at December 31, 2011 and 52,510,174
shares issued and outstanding at December 31, 2010 76 53
Paid-in capital 110,751 105,678
Accumulated deficit (107,621 ) (106,175 )
Accumulated other comprehensive income 422 256
Total stockholders' equity (deficit) 3,628 (188)
Total liabilities and stockholders' equity
(deficit) $ 9,932 $ 8,005
PROPHOTONIX LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands
(unaudited)
Years Ended December 31 2011 2010
Operations
Net loss $ (1,446) $ (2,649)
Loss from discontinued operations, net of tax (19) (116)
Gain on sale of discontinued operations, net of tax - 542
Loss from continuing operations (1,427) (3,075)
Adjustments to reconcile net loss to net cash used in
operating activities:
Stock-based compensation expense 199 501
Depreciation and amortization 601 917
Foreign exchange loss 286 -
Amortization of debt discount and financing
costs - 551
Non cash interest income - (7)
(Gain) loss on disposal of assets 8 (632)
Asset impairment - 226
Provision for inventories 61 37
Provision for bad debts - 49
Deferred taxes - (113)
Other change in assets and liabilities:
Accounts receivable (569) (669)
Inventories 100 (698)
Prepaid expenses and other current assets (1) 278
Accounts payable (530) 901
Income taxes payable 29 -
Accrued expenses (579) 276
Other assets and liabilities 29 -
Net cash used in continuing operations (1,793 ) (1,458 )
Net cash used in discontinued operations (19) (116)
Net cash used in operating activities (1,812 ) (1,574 )
Investing
Proceeds from disposal of assets - 3
Financing obligation payments - (136 )
Purchase of property, plant and equipment (95 ) (464 )
Net cash used in continuing operations (95) (597)
Net cash provided by discontinued operations 692
Net cash provided by (used in) investing activities (95 ) 95
Financing
Net proceeds from sale of common stock 4,897 863
Borrowings of revolving credit facilities, net 8 57
Principal repayment of long-term debt (753 ) (2,248 )
Net cash provided by (used in) financing activities 4,152 (1,328)
Effect of exchange rate on cash 10 140
Net change in cash and equivalents 2,255 (2,667)
Cash and equivalents at beginning of year 1,811 4,478
Cash and equivalents at end of period $ 4,066 $ 1,811
Supplemental cash flow information:
Cash paid for interest $ 363 $ 564
Cash paid for income tax $ 15 $ -
Non cash investing and financing activities:
Issuance of common stock to settle liabilities / debt $ - $ 1,274
Common stock issued in connection with financings $ - $ 16
Warrants issued in connections with financings $ - $ 24
Write-off of assets from sale-leaseback transaction $ - $ 2,821
Write-off of finance lease from sale-leaseback
transaction $ - $ (3,450)
Notes to unaudited Preliminary Results
The financial information set out in this document does not
constitute the Company's statutory accounts for 2010 or the
Company's annual audited accounts for 2011 to be published and sent
to its shareholders in accordance with Rule 19 of the AIM Rules for
Companies. The 2011 unaudited preliminary financial statements were
prepared under US GAAP and were approved for issue on 1 March
2012.
Cautionary Statement
All statements other than statements of historical fact,
including without limitation, those with respect to ProPhotonix's
goals, plans and strategies set forth herein are forward-looking
statements. The following important factors and uncertainties,
among others, could cause actual results to differ materially from
those described in these forward-looking statements: uncertainty
that cash balances may not be sufficient to allow ProPhotonix to
meet all of its business goals; uncertainty that ProPhotonix's new
products will gain market acceptance; the risk that delays and
unanticipated expenses in developing new products could delay the
commercial release of those products and affect revenue estimates;
the risk that one of our competitors could develop and bring to
market a technology that is superior to those products that we are
currently developing; and ProPhotonix's ability to capitalize on
its significant research and development efforts by successfully
marketing those products that the Company develops. Forward-looking
statements represent management's current expectations and are
inherently uncertain. All Company, brand, and product names are
trademarks or registered trademarks of their respective holders.
ProPhotonix undertakes no duty to update any of these
forward-looking statements.
Use of Non-GAAP Financial Measures
The Company provides non-GAAP financial measures, such as
EBITDA, to complement its unaudited consolidated financial
statements presented in accordance with US-GAAP. Non-GAAP financial
measures do not have any standardized definition and, therefore,
are unlikely to be comparable to similar measures presented by
other reporting companies. These non-GAAP financial measures are
intended to supplement the user's overall understanding of the
Company's current financial and operating performance and its
prospects for the future. Specifically, the Company believes the
non-GAAP results provide useful information to both management and
investors by identifying certain expenses, gains and losses that,
when excluded from the unaudited US-GAAP results, may provide
additional understanding of the Company's core operating results or
business performance, which management uses to evaluate financial
performance for purposes of planning for future periods. However,
these non-GAAP financial measures are not intended to supersede or
replace the Company's unaudited US-GAAP results.
The Company uses EBITDA (earnings before interest, taxes,
depreciation, amortization, stock-based compensation and impairment
charges) as a non-GAAP financial measure in this press release. A
reconciliation of net loss to EBITDA for the total year 2011 and
2010 is as follows:
(in thousands)
Year Ended December 31,
2011 2010
------------ ------------
Net Loss (1,446) (2,649)
Gain on sale of discontinued operations - (542)
Loss from discontinued operations 19 116
Plus:
Interest and other expense / (income), net 547 (136)
Depreciation 326 527
Intangible asset amortization 275 390
Asset impairment - 226
Stock based compensation 199 501
Taxes 37 (111)
Amortization of Debt Discount & Financing Costs - 551
EBITDA Loss (43) (1,127)
------------ ------------
AIM listing expenses - 754
Charges related to abandoned lease - 115
------------ ------------
Adjusted EBITDA Loss (43) (258)
------------ ------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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